Netflix Losing $1 Billion a year on Instant Streaming

You might have thought that Netflix was destroying it, what with the service being everywhere and accounting for a sizable portion of evening internet traffic, but it turns out the the company is actually having some trouble. In fact, they are apparently losing $1 billion a year on Instant Streaming, the crown jewel in the Netflix hat.

Of course, Reed Hastings, the CEO of Netflix, doesn't think that Amazon is doing much better. He estimates, based on the content deals that Netflix was able to eke out, that the company's less complete offerings are costing them $500 million - $1 billion each year. That difference is made all the more recognizable when you look at the latest usage numbers. Sandvine, a broadband company, reported that Netflix makes up 33% of evening internet traffic. Amazon, on the other hand, made up a mere 1.8%. Though that number is likely to grow.

Hastings further went on to see that while Amazon wasn't much of a competitor at the moment, they would be in he future. “Amazon is the best competitor we’ve ever faced,” he explained. He sees a future where Netflix and Amazon vie for the title of top streaming company on the internet, something that Amazon has a bit of an advantage with, thanks to their tablets.

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Something isn't right as there's two different versions of who is losing $1 billion a year. This article seems to indicate that it's actually Amazon Prime that's losing $1 billion a year...

Netflix CEO Reed Hastings has said Amazon will one day be a real competitor to them, but they will need to keep spending to do so.
The executive says Amazon has been losing up to $1 billion a year as it looks to acquire streaming video content rights.

Take $1 billion, divide by 30 million, you see they are losing $33+ per subscriber. Elsewhere they said 5/6 of their subscribers are of the streaming kind -- which is less than $9 per month.

I think the $1 billion is gross -- not profit. People who switch from redbox to streaming take away from gross sales. Yet profit may actually increase. Much less overhead for streaming.

Same goes for Amazon. If you read carefully, Tim's article is just parrotting part of Mr. Pogi's link. Amazon is playing it cool: "We don't comment on our investments" -- but Amazon streams are a great deal.